Similar to energy, real estate is asset-intensive and a company’s value depends on how much cash flow specific properties generate. - You look at Price / FFO (Funds From Operations) and Price / …
Walk me through how we might value an oil & gas company and how it’s different from a “standard” company.
You use the same methodologies, except: - You look at industry-specific multiples like P / MCFE and P / NAV in addition to the more standard ones. - You need to project the prices of commodities …
I have one company with a 40% EBITDA margin trading at 8x EBITDA, and another company with a 10% EBITDA margin trading at 16x EBITDA. What’s the problem with comparing these two valuations directly?
There’s no “rule” that says this is wrong or not allowed, but it can be misleading to compare companies with dramatically different margins. Due to basic arithmetic, the 40% margin company will …
How far back and forward do we usually go for public company comparable and precedent transaction multiples?
Usually you look at the TTM (Trailing Twelve Months) period for both sets, and then you look forward either 1 or 2 years. You’re more likely to look backward more than 1 year and go forward more than …
I have a set of precedent transactions but I’m missing information like EBITDA for a lot of the companies – how can I find it if it’s not available via public sources?
1. Search online and see if you can find press releases or articles in the financial press with these numbers. 2. Failing that, look in equity research for the buyer around the time of the …
I have a set of public company comparables and need to get the projections from equity research. How do I select which report to use?
This varies by bank and group, but two common methods: 1. You pick the report with the most detailed information. 2. You pick the report with numbers in the middle of the range. Note that you …